Walter Energy Inc. filed for bankruptcy protection yesterday, becoming the latest coal miner to do so as they struggle with a steep fall in prices since 2011, Reuters reported yesterday. The company said that only its U.S. units have filed for a pre-packaged chapter 11 protection, and that operations in Canada and the UK are not included in the filings. Walter Energy, which has coal mines in Alabama and West Virginia, said terms of the restructuring assume senior lenders will convert all of their debt into equity. The Birmingham, Ala.-based company also said it had enough cash to assure that vendors and suppliers would be paid during the reorganization process.
Milagro Oil & Gas filed for chapter 11 protection yesterday, joining the ranks of energy companies seeking refuge from diving commodity prices, the Wall Street Journal reported today. The Houston company has an agreement with major creditors that calls for it to swap its oil and gas assets to White Oak Resources VI LLC in exchange for $120 million in cash plus about $97 million in equity in White Oak. Described in court papers, Milagro’s restructuring strategy is designed to pay off about $88 million in top-ranking debt, and swap or sell equity in the reorganized Milagro to second lien noteholders, in exchange for $250 million worth of existing debt and new value from a rights offering. Milagro said that it has been trying for “several years” to find a way out of financial trouble caused by declining crude oil and natural gas prices. Despite those efforts, the company found itself “hamstrung by the same commodities pricing issues that had plagued their ability to generate profits since 2008,” according to papers filed in the U.S. Bankruptcy Court in Wilmington, Del. Read more. (Subscription required.)
Walter Energy Inc. is preparing to file for bankruptcy protection this week after agreeing on a fast-track restructuring process that would hand ownership of the coal miner to senior creditors, the Wall Street Journal reported today. The company, which has been battered by a sharp drop in coal prices, plans to swap its senior creditors’ debt for ownership of the company in a chapter 11 restructuring that would largely wipe out junior creditors and reduce labor and pension costs. Walter and a group of senior bond and loan holders yesterday were finalizing an agreement that would allow the company to use cash pledged as collateral to fund its operations in bankruptcy. Walter had $434.7 million in cash as of March 31, according to a regulatory filing.
Sabine Oil & Gas Corp., the Houston-based exploration and production company that merged with Forest Oil Corp. last year, filed for bankruptcy amid falling oil prices, Bloomberg News reported today. Sabine had about $2.5 billion in assets and about $2.9 billion in liabilities as of May 31, according to chapter 11 filings in bankruptcy court in New York. The company continues to discuss a consensual financial restructuring plan with lenders and debt holders. Sabine has sold assets, cut expenses for drilling and new wells and froze wages to cope with a sharp decline in energy prices, according to court filings. “Given the severity of the current market conditions and their impact on the company’s cash flow situation, the company has been unable to right-size its balance sheet through cost-cutting and self-help measures alone,” Chief Financial Officer Michael Magilton said. Read more.
A Quebec judge rejected Canadian Pacific Railway Ltd's challenge to a settlement for victims of the Lac-Megantic crude-by-rail disaster on Monday, helping clear the way for compensation payments, Reuters reported yesterday. Parties previously named in a class action lawsuit, including closely-held Irving Oil, General Electric, Shell Oil Company, ConocoPhillips, Marathon Oil and others, have agreed to contribute to a C$431 million ($338.28 million) compensation fund for victims of the July 6, 2013 rail disaster. Forty-seven people were killed and the downtown core of the town was destroyed following the derailment of a train carrying Bakken crude oil. CP transported the tank cars of oil involved in the accident to Montreal before handing them over to the now insolvent Montreal, Maine & Atlantic railway, which was operating the train at the time of the crash. Unlike other companies targeted by a Lac-Megantic-related class action lawsuit, CP did not agree to the settlement and challenged the provincial court's jurisdiction in approving the deal. CP has 21 days to appeal Monday's rulings, said Patrice Benoit, lawyer for the defunct Montreal, Maine & Atlantic. Before funds from the C$431 million settlement can be disbursed, a U.S. bankruptcy court in Maine must first confirm a related chapter 11 plan for the American parent company of the Montreal, Maine & Atlantic railway. "The plans are integrated and work together," explained Bob Keach, the railway's Chapter 11 trustee. CP could raise similar objections during a U.S. hearing on August 20, Keach said. If no objections to, or appeals of the Canadian and American plans are filed, then "we'll be ready to distribute the funds to the victims" in the fall, he said. Read more.
A bankruptcy judge has appointed attorney Jason Searcy as chapter 11 trustee for San Antonio-based oil company Primera Energy LLC while the company reorganizes operations, the San Antonio Business Journal reported yesterday. Bankruptcy Judge Craig Gargotta signed the order appointing Searcy yesterday. Primera Energy owner Brian Alfaro lost control of his company during a hearing last week where Bankruptcy Judge Ronald King decided that a chapter 11 trustee should oversee the company, reorganize it and hopefully restore it to health.
Boomerang Tube LLC's private-equity owner and its unsecured creditors traded accusations yesterday, exposing deep rifts over a proposed plan to hand control of the company to its lender, Dow Jones Daily Bankruptcy Review reported today. In court papers made public yesterday, Boomerang's unsecured creditors accused Ukrainian-born billionaire Len Blavatnik's Access Tubulars LLC, which is Boomerang's majority owner, and lender Black Diamond Capital Management of collaborating in a scheme designed to shortchange junior creditors. Access disputes the accusations, which it says are "made out of whole cloth." Boomerang, which manufactures pipes and tubing for oil and natural-gas companies and filed for chapter 11 protection last month, has outlined a restructuring plan under which lenders would trade about $214 million in debt for ownership of the reorganized company as well as for $55 million in new debt.
The trustee liquidating Lehman Brothers Holdings Inc.’s brokerage unit yesterday asked a federal bankruptcy judge for permission to distribute another $1.89 billion to unsecured creditors, boosting their total recovery to $7.78 billion, Reuters reported yesterday. Trustee James Giddens said that the creditors will have recouped 35 cents on the dollar, up from 27 cents so far, if the proposed third payout wins approval from Bankruptcy Judge Shelley Chapman at an August 4 hearing in Manhattan. Roughly 111,000 former customers of the brokerage have already been paid more than $106 billion, and senior creditors have also been paid in full.
Bankruptcy Judge Arthur Federman on Thursday cleared AM Pyrotechnics LLC, which makes and choreographs fireworks displays, to get out of bankruptcy protection with a plan to repay some of its debt over five years, Dow Jones Daily Bankruptcy Review reported today. AM Pyrotechnics' reorganization plan said that it plans to use future profit to make quarterly payments to unsecured creditors who will be repaid 35.5 percent of their claims, according to court documents. The quarterly payments will flow to Chinese fireworks supplier Hunan Liuyang Huan Yu. (Global) Co., which sued AM Pyrotechnics in March for an unpaid bill of about $107,000.
Signal International LLC filed for chapter 11 protection yesterday to deal with lawsuits accusing it of labor trafficking involving citizens of India recruited to work in the U.S., the Wall Street Journal reported today. A Gulf Coast marine services operator, the company was hit earlier this year with a $14 million damages award in a case brought by five people who said they paid $10,000 to $20,000 for jobs they were told would turn into permanent residency in the U.S. Instead, they were forced to live in guarded labor camps under allegedly poor conditions, according to the suits they brought. A jury found for the Indian citizens, and in May a federal court entered judgment against Signal. Trial was supposed to start July 20 in the next case, but the bankruptcy filing in the U.S. Bankruptcy Court in Wilmington, Del., halts continued litigation. Signals said that it is trying to implement a deal in chapter 11 that will resolve the litigation and save its business. Signal faces 11 similar lawsuits involving 227 people recruited from India under allegedly illegal conditions, lured by alleged false promises to work as welders, pipe fitters and in other positions under the U.S. government’s H-2B guest worker program.
